UK
IRE
AU
CA
US
ZA
NAHead of Content
Page written by Ian Hawkins. Last reviewed on March 11, 2026. Next review due April 1, 2027.
This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.
It might sound like another long-winded financial abbreviation, but EBITDA is actually a crucial acronym if you’re looking into financing a business and have equity funding on your radar. It stands for Earnings Before Interest, Tax, Depreciation, and Amortization. In simpler terms, it’s a detailed way to show your business’s profit. EBITDA helps you calculate your company’s overall earnings or net income before all the necessary evils are deducted. Confused? Don’t worry. We’re here to simplify everything you need to know about business finance.
To calculate EBITDA, follow these steps:
Determine the company’s net income: Obtain the net income figure from the company’s income statement. Net income is the total revenue minus all operating expenses, interest, and taxes.
Add back interest, taxes, depreciation, and amortization: Identify the interest expense, taxes, depreciation, and amortization from the company’s financial statements. Add these values back to the net income obtained in step 1.
Calculate EBITDA: Sum up the net income, interest, taxes, depreciation, and amortization figures to calculate the EBITDA.
The formula for calculating EBITDA is:
EBITDA = Net income + interest + taxes + depreciation + amortization
EBITDA is commonly used as a measure of a company’s cash flow and profitability, as it provides insight into its operating performance without considering non-operating factors. However, it’s important to note that EBITDA has limitations and should be used alongside other financial metrics and analysis when evaluating a company’s financial health.
It depends on your industry. Investors know this, and they’ll regularly compare a company’s EBITDA to the industry average or to similar businesses before deciding to invest. So it’s important to optimize your EBITDA if you can before going all-in on your funding search.
“If only I had a magic wand!” we hear you say. There’s no need, as there are a few simple steps you can take to improve your profitability and start accessing equity funding for your business.
Start by maintaining your prices because discounts just reduce your EBITDA. Then, think about where else you can cut costs. Could you cut down on travel or entertainment? Manage your inventories better? Start selling to new markets? Drop lines that are losing money?
Registering with Swoop gives you the opportunity to integrate your bank account and quickly and safely identify savings across banking, FX, broadband, and insurance. With average savings per SME being around $3,000, it can certainly make a positive impact on your EBITDA.
Whatever you do to boost your EBITDA will make your business more attractive to equity investors.
Disclaimer: Swoop Finance Ltd (Swoop) helps Canadian firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans or other finance products ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. Swoop may receive a commission or finder’s fee for effecting such introductions. If you feel you have a complaint, please read our complaints section highlighted above and also contained within our terms and conditions.
yet? Register here!